Elisa Communications

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• Elisa Communications
• TMT Conference Barcelona
• September 17 - 19, 2002
• www.elisa.com

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Key Topics

• Elisa Today
• Review of Core Business in H1/2002
• Focus on CAPEX and Cash Flow
• Financial Position on Solid Base
• Performance of Core Business Areas
• Elisas View on Future Market Growth

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Elisas Strategic Agenda

• Leading telecommunications service provider of
  Finnish customers
• Towards domestic market leadership in 2005
• Reached market leadership in fixed line business
  starting Q3 2001 by purchasing Soon
  Communications
• Mobile operator in North-western Europe
• Strong player in Finland and Estonia
• Towards Pan-European and global dimension with
  Vodafones product and brand partnerships
• Growth of customer base from Germany
• Leading consolidator of city carriers,
  significant effect on revenue growth of Elisa
  starting from 2002 and EBITDA growth starting
  from 2003

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Core Business of Elisa

• Elisa provides
• comprehensive telecommunications solutions to
  end-user customers, and
• network services to carriers in chosen markets.
• The main geographic market is the domestic market
  Finland, where Elisa targets market leadership in
  all customer segments as the current market share
  is high due to long-term presence
• In new markets Germany and Estonia, Elisa has a
  focused strategy as new entrant mobile operator
  in Estonia, multi-local access network provider
  in Germany.

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Elisa on Track to Domestic Market Leadership
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Group Business Proceeded as Expected in the First
Half of 2002

• Moderate growth with improved profitability in
  Mobile Business
• Amount of subscribers increased due to the
  intensive sales efforts of the service operator
  itself although Telia switched their subs away
  from the Radiolinja network
• MMS services will be launched in Q3/2002
• Strong growth in Fixed Network Business due to
  new group companies
• Profitability stayed at the same level
• Strong growth in ADSL subscriptions
• Profitability development of Germany-based
  Business was on track
• The amount of new business customers exceeded
  targets
• Business performance was in line with the
  guidance
• Shutdown of the mobile retail business was
  completed according to plan

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Focus on CAPEX and Cash Flow

• CAPEX has been restrained to moderate level
• Fixed networks integration reduces CAPEX needs
• The new technology will facilitate lower total
  construction and maintenance cost
• Building of UMTS network is underway and will
  stretch over several years
• Improving profitability of Germany-based business
  lowers the need for financing
• Annualised CAPEX for 2002 will be restrained to
  EUR 250m (excl. network buy-backs)
• Operative cash flow has turned positive
• Previous full year target has already been met by
  the strict CAPEX program
• Improvement of the group EBITDA and the current
  CAPEX program will guarantee a positive cash flow
  also for the second half of the year
• Cash flow for the year 2003 is expected to be
  positive
• Clean EBITDA change in working capital
  operative CAPEX (excl. network buy-backs)
• financial items taxes

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CAPEX by Quarters, EUR million
Investments in fixed assets include Radiolinjas
buy-backs of leasing liabilities
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Financial Position is on Solid Base

• Increase in net debt has ceased
• Cost cutting program and lower CAPEX due to new
  market situation
• Net debt increased due to consolidation of
  Tropolys and change in booking of debt related to
  redemption of Soon and Radiolinja shares
• Net debt cutting program is underway
• Means include disposal of non core businesses
  (Direktia, Instalia, Soon directory)
• Net debt / EBITDA ratio less or equal to 2
  remains as target
• Financing is secured
• Elisa has access to debt capital market
• Debt covenants are not in danger to be breached
• EUR 170m committed bank facility is available
• No step up language in bank loans and bonds

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Mobile Business
Revenue, EUR million
EBITDA / revenue,
EBIT / revenue,

• Future profitability drivers
• Network buy-backs will improve margins
• Vodafone cooperation brings more high ARPU
  business customers
• Vodafone cooperation allows optimisation of RD
  costs
• New services (GPRS, MMS) will bring gradual
  growth
• Strict cost control supports better profitability

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Leasing Liability of Radiolinja

• Between 1990 1999 Radiolinja leased
  exclusively, with long-term agreements, a
  significant part of the mobile network from local
  telephone companies in Finland
• The UMTS delivery agreements executed by
  Radiolinja will reduce the economical life time
  of the network leased from telcos significantly.
  It will become shorter that the term of the lease
  agreements.
• The new technology will facilitate to lower total
  construction and maintenance cost of the 2G and
  3G networks
• Radiolinja endeavours to rearrange the lease
  agreements by the beginning of the year 2004 at
  the latest
• The related one-time write-down will be booked in
  accordance with the current practice (2/3 of the
  repurchase value will be written down)
• Remaining leasing liability of Radiolinja exceeds
  the amount of about EUR 77m and the book value of
  the corresponding network depreciated according
  to plan
• NPV of the leasing liability was EUR 117m in the
  end of June

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Fixed Network Business
Revenue, EUR million
EBITDA / revenue,
EBIT / revenue,

• Future profitability drivers
• Executed cost cutting programs will take full
  effect in the latter half of the year
• Sale of low margin businesses improve margins
  (for example Instalia)
• Network integration and optimising decreases
  CAPEX needs
• New higher prices from July 1, 2002 will bring
  EUR 10m more revenue annually
• New domestic competition environment will enhance
  the position of Elisa as a domestic solution
  provider

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Germany-based Business
Revenue, EUR million
EBITDA / revenue,
EBIT / revenue,

• Future profitability drivers
• Shutdown of the mobile retail business was
  completed according to plan
• Revenue is estimated to grow faster than the
  sector in Germany
• Margins are improving, EBITDA will turn positive
  by the end of 2002 and EBIT by the end of 2003
• In 2003 EBITDA is expected to be positive on
  annual basis
• Financial need of Germany-based business will
  decrease significantly

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Growth Trends of the Finnish Market
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• Elisa Communications
• TMT Conference Barcelona
• September 17 - 19, 2002
• www.elisa.com